Customers of various businesses, such as retail merchants, government entities or financial institutions, are often required to present an identification to complete a transaction. For example, financial institutions usually require customers to present an identification to complete a withdrawal or deposit transaction, cash a check, or open a new account. Unfortunately, a number of advances have been made in counterfeiting technology which make it increasingly difficult for the naked eye to distinguish legally issued identification documents from fraudulent identification documents.
Since enactment of the USA Patriot Act, identity verification has become even more important to financial institutions and other types of businesses. Under Section 326 of the Act, financial institutions must institute a Customer Identification Program (CIP) that contains reasonable risk-based procedures to collect identifying information about customers opening an account, verify that customers are who they say they are to the extent reasonable and practicable, maintain records of customer information and methods used to verify their identity, and determine whether the customer appears on any list of suspected terrorists or terrorist organizations.
Additionally, with the rise of identity theft and other forms of fraud, financial institutions and other businesses seek new ways to evaluate the risk of doing business with a particular individual or other entity. That is, before initiating a transaction with a particular individual or entity, businesses want to know whether that individual or entity presents a risk of losses due to fraud, account abuse, or other reasons. Further, if an individual or entity presents some risk, the businesses want to know how much risk and what kind of risk so that they can evaluate whether they want to do business with this entity and, if they do decide to do business, what kind of services and/or transactions they want to offer.